Owning a home is and should be a major source of pride for anyone who has attained this accomplishment. Only a small percentage of people in the world own modern, free-standing homes of their own.
Of course, the only real downside to having a home is paying the mortgage each month. Mortgage payments are a fact of life for all but the few homeowners who have completely paid off their home mortgages. For the rest of us, we will probably be stuck making payments for some time to come after a mortgage purchase.
But, there is something to potentially be cheery about: the opportunity to refinance your mortgage at a better rate. Mortgage refinance is a way to break out of the current monthly payments you are making and structure a new mortgage loan.
If you would like to refinance after a mortgage purchase, here are the answers to 5 frequently-asked-questions about refinancing your mortgage:
1. What is a mortgage refinance?
A: Mortgage refinance is essentially the act of paying off your existing mortgage by taking out a new one, usually at a lower interest rate. You may take out a loan that is roughly the same size as your current mortgage, or you may choose to take out a larger loan (depending on how much equity you have in your home).
2. What is required in order to refinance my home?
A: To refinance, you will need to have a well-established credit history. This should be no problem for you, however, since you have been approved for a mortgage loan in the past. In addition, you should be ready to show documentation providing that you are currently employed, as well as your current income level. Typically, some closing costs are involved in refinancing.
3. What are the advantages of refinancing?
A: In addition to potentially lowering your monthly payments due to having a new, lower interest rate, other potential advantages include:
* the ability to pay less in interest over the life of the loan
* the ability to pay down your loan over or less time
* the ability to cash out equity in your home to pay down credit card or other debt
4. When should you refinance?
A: There are a number of factors that go into helping you decide whether this is a good time to refinance your home loan. For example, you want to make sure (in most cases) that the new interest rate for which you will be applying is lower than your current rate.
5. How can I qualify for the best refinancing rates?
A: To qualify for the best new rate, make sure you shop around with a number of mortgage refinancing lenders. You should be applying to at least 5 lenders. Start by researching lenders online and coming up with a list of 4 lenders. Then, add your current mortgage lender to your candidate list for a total of 5. Finally, apply to each one on your list in order to find out where you can get qualified for the best interest rate deal.
Consider the answers to these 5 FAQs as you decide whether it makes sense to refinance your mortgage at this time.